EPC mode for NH works in Kerala

All works for improvement, development, and maintenance of roads and bridges on National Highway stretches passing through the State will be taken up in the EPC (Engineering, Procurement and Construction) mode for faster rollout of the projects and their time-bound completion.

The decision to adopt the EPC mode instead of the item rate contracts comes in the wake of the latest guidelines issued by the Union Ministry of Road Transports and Highways (MRTH), official sources told The Hindu.

Along with this, the Unoion Ministry has made it mandatory for bidders to participate in the scheme for annual pre-qualification to be eligible in the bidding process of National Highway projects implemented through the Ministry, the National Highways Authority of India, the State Public Works Department (PWD), and the Border Roads Organisation.

Qualified bidders

Only those bidders qualified under the above process can submit proposals for NH works in Kerala through the EPC mode, sources said. The PWD is in receipt of the communication from the Ministry in this regard and steps have been taken to inform the contractors.

The Union Ministry has also made it mandatory for applicants to pay Rs.10,000 towards fee for the request for annual qualification (RFAQ) document.

This amount is non-refundable.

The EPC mode had been adopted by the Ministry as the annuity-based projects are comparatively expensive and conventional contracts are prone to time and cost overruns.

At present, the roads were mainly built through conventional item rate contracts where the government provides the detailed design as well as the estimates of quantities for different items of work (It is called Bill of Quantities).

Payments

Payments to the contractor are made on the basis of measurement of the work done in respect of each item. Item rate contracts are prone to excessive time and cost overruns, sources said.

The EPC approach proposed for the National Higway works relies on assigning responsibility for investigations, design, and construction to the contractor for a lump sum price which is determined through competitive bidding.

An analysis of 20 NH projects executed on item-rate contracts showed that they took on an average 61 months to complete as against the 29 months taken by projects executed through public-private partnership which generally adopted the EPC mode.

Cost overruns

It has also been found that these projects had cost overruns of an average 48 per cent (ranging from 25 to 183 per cent), besides large volumes of forgone toll revenues on account of delayed completion.